Analysts at the major US bank JPMorgan Chase are confident that investors’ profit-taking in the Grayscale Bitcoin ETF (GBTC) is nearly complete and outflows will return to stabilize.
This condition, in line with the demand recorded in ETFs of other operators such as BlackRock, Fidelity, and Ark, would put an end to the contraction phase that is currently affecting BTC, bringing prices back to new local highs.
Is Bitcoin ready to take off again? Will the support at $40,000 hold over the weekend?
All the details below.
JPMorgan: Grayscale’s ETF sales are almost complete, the market is getting ready to rebound
On Thursday, analysts from the multinational financial services company JPMorgan Chase published a note regarding the market strategy to adopt in the context of Bitcoin ETFs, stating that the situation for the cryptocurrency could be more positive than it seems.
In particular, the attention of experts from the US bank seems to be focused on the Grayscale ETF (GBTC) which, since the approval of the financial instrument, has consistently dumped Bitcoin, for a total value of almost 4 billion dollars.
On Wednesday, January 24th, the cryptocurrency exchange-traded fund market recorded its biggest outflow day, led by GBTC which alone liquidated about $429 million, approximately 10% of the total outflows.
JPMorgan believes that investors’ profit-taking in Grayscale is almost over, and that selling pressure on Bitcoin will stabilize soon, giving the opportunity for the crypto asset to rebound.
In fact, a large part of the GBTC sales we have witnessed so far belong to those individuals who bought the Grayscale Trust in the past when it was still at a discount to the NAV value, earning a significant price difference. (now the discount has flattened around -1.5%).
Many others, on the other hand, could be attributed to a transfer of funds to competing ETFs with lower fees: Grayscale has an annual management cost of 1.5% while Blackrock and Fidelity offer 0.25%.
Finally, it is necessary to remember that in the midst of all this, FTX also comes into play, which had an open position on GBTC, and which has recently been closed.
Bitcoin in the last week has been traded within a trading range ranging from $42,000 to $38,000 with bears maintaining control of price action.
According to the group of analysts at JPMorgan, led by Nikolaos Panigirtzoglou, the crypto is now ready to rebound towards new local highs as Grayscale is alleviating outflow pressure.
If Michael Sonnenshein’s fund were to interrupt the selling flows, and if demand in the other spot ETFs remained the same as recorded in recent days, we could easily witness an instant market recovery.
The dump of these days has been mainly driven by GBTC, but according to what is written in the bank’s note:
“most of the downward pressure on bitcoin from that channel should be largely behind us”
Among the ETFs that have attracted the most inflows, we see IBIT by BlackRock, FBTC by Fidelity, BITB by Bitwise, and ARKB by Ark Invest. In total, these 4 funds have attracted over $4.4 billion, more than what has been withdrawn from GBTC.
Bitcoin Price Analysis: Will $40,000 Provide Support?
According to JPMorgan’s analysis, Bitcoin should soon resume its bullish trend, with spot ETFs leading inflows into the cryptocurrency market in the coming months.
At the time of writing, the top cryptocurrency by market capitalization is trading at a price of $40,100, with bulls still unable to take control of the situation.
From January 11, 2024 onwards, after reaching a peak of $49,000, Bitcoin felt the weight of sales, losing several supports and breaking down the 50-period exponential moving average on the daily chart.
Overall, in 15 days the crypto asset has lost about 18.5% of its value, but it still remains in a largely positive price structure that has seen a rise of 36.6% in the last 6 months of trading.
If JPMorgan’s theories were to prove correct, then Bitcoin will likely hold the support at $40,000 and bounce back from there, first reclaiming $45,000 and then reaching new highs in conjunction with the April halving.
At the same time, the current trading level may not be enough to contain the latest Grayscale sell-offs and therefore we could expect a dump down to $35,000, where the 223-period EMA converges.
The RSI is running out but still has room for prolonged bearish movements, while market volumes have remained relatively high in recent days.
In support of JPmorgan analysts’ positive view, we observe the trend of open interest on Bitcoin derivative exchanges, where the picture seems to be more neutral.
The sum of the open positions (short and long) currently on perpetual and options markets remains high at 10.5 billion dollars, as evidence that there is still interest in speculating on Bitcoin.
In addition, according to the data from Coinglass, Bitcoin’s open interest has increased by just under 1% in the last 24 hours, giving an encouraging premonitory signal for price momentum during the weekend.
The funding rate remains positive on almost all operators (except for OKx), so traders who are requesting higher leverage are positioned long, waiting for BTC to shine again as it did in Q3 2023.
